ORLANDO, Fla. -- Darden Restaurants Inc., operator of Red Lobster and Olive Garden, said Thursday that it is buying the Yard House USA restaurant chain to help broaden its appeal with younger and higher-income guests for $585 million in cash.
But it said profits would initially drop because of the deal and it would trim its share buyback plan to help pay for it, causing shares to fall $1.22, or 2.4 percent, in after-hours trading to $48.98.
The acquisition of Yard House from private equity firm TSG Consumer Partners and other investors is expected to close by November.
Darden said it expects the acquisition will initially hurt earnings by 3 to 5 cents per share in the fiscal year 2013 through next May but help boost profits after that.
Yard House, based in Irvine, Calif., offers an array of draft beers and food like pizzas, steaks and salads. It has 39 restaurants in 13 states.
Darden said that total revenue will rise in fiscal 2013 by 9 to 10 percent, helped by the transaction. Sales at Red Lobster, Olive Garden and LongHorn Steakhouse restaurants open a year or more are expected to rise 1 to 2 percent over the same period.
The company said that it would likely buy back only $50 million worth of shares through next May, below a previously expected $200 million to $250 million.
Denny's may be known for its gut bomb menu items such as the <a href="http://www.huffingtonpost.com/2011/09/01/dennys-mac-n-cheese-patty-melt_n_945390.html" target="_hplink">mac n cheese patty melt</a>, but survey participants were not so enthused with the offerings.
A stack of big fluffy pancakes is not enough to persuade people to vote IHOP #1. Instead, participants voted it number 16.
15. Ruby Tuesday
Ruby Tuesday's was called out for having the healthiest menu choices, but that wasn't enough to make it a favorite chain.
14. TGI Friday's
With a somewhat similar menu to Ruby Tuesday, TGI Friday's also did not stack up so high.
0.7% thought Chili's fajitas, quesadillas and other offerings were worthy of the number one spot.
Noticing a pattern here? Applebee's only fared a tad better than its competitors.
11. Golden Corral
Just edging into the top 10 is Golden Corral, perhaps not the best known chain, but definitely a player. Based on this survey, it seems as if buffets are still popular, and Golden Corral was considered the best value.
10. Longhorn Steakhouse
Longhorn Steakhouse may not be the next Peter Luger's, but it makes enough diners happy enough.
9. Red Robin
We can't help wondering if the catchy Red Robin jingle contributes to the chain's success.
8. Cracker Barrel
Cracker Barrel has almost a cult following of fans craving Southern-inspired fare.
7. Outback Steakhouse
Those bloomin' onions apparently keep bringing diners back. Oh, and the steaks.
6. Red Lobster
Endless shrimp and cheap lobster make one happy casual diner.
Massive portions of Italian food are enough to give this chain the number 5 spot.
4. PF Chang's
PF Chang's was the only Chinese food chain to break the Top 17.
3. Olive Garden
Never-ending breadsticks and pasta bowls are perhaps enough to warrant a bronze medal.
2. Texas Roadhouse
The surprising silver medalist, Texas Roadhouse, is known for its Americana fare.
1. Cheesecake Factory
The Cheesecake Factory captured 7.3% of the vote share, which was more than double the second place finisher, Texas Roadhouse. Perhaps people are digging the new <a href="http://www.huffingtonpost.com/2011/08/01/cheesecake-factory-debuts_n_915201.html" target="_hplink">Skinnylicious menu</a>. This is the second year in a row that the Cheesecake Factory has nabbed the number one spot.